Comfort Of Home:

There has been an incessant discussion whether the 10 year yield has bottomed as of late. Of course its behavior has major implications, not only on credit card and student loans, but probably most importantly mortgage rates. The housing sector has thrived on historical low rates, and below is the chart of the ITB showing its strong uptrend over the last year. A double top looked to be in place, but the ETF to its credit is hanging around, and the longer it remains at this altitude the burden of proof will remain with bears to make their argument that a possible large drawdown is in the near future. The near 4% combined loss the weeks ending between 11/1-8, in big volume, witnessed no follow through to the downside, and if that was the best the bears could do it was a weak showing. The last 3 months produced one WEEKLY double digit gain, with weeks ending 9/13, 10/11 and 11/8 jumping 22.8, 15.6 and 11.9%. Prior to this double digit jumps, there was not one before it dating back almost 3 years to the week ending 11/18/16. This frantic, erratic behavior is often seen at tops. It will be interesting to see who wins the tug or war, but the housing market is giving the edge to the bond market bulls.

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